Receiving a tax audit notice is never pleasant. Audits can lead to additional taxes, interest, and penalties, but Noble Pacific® Tax Group can help you minimize or even avoid these liabilities.

What Is a Tax Audit?

A tax audit reviews your financial information to ensure proper reporting and accurate tax liability. Audits can be conducted by the IRS or by state agencies and are often triggered by:

• High income or unusual tax attributes.
• Significant itemized deductions.
• Self-employment or cash-based businesses.
• Foreign assets or income.
• Reporting a hobby as a business.

What to Expect During a Tax Audit:

Audits involve communication with the IRS or state tax authority, ranging from providing documents to attending interviews. It’s essential to respond appropriately and promptly.

Post-Audit Outcomes:

1. No Change: Your return stands as is.
2. Agreement: You accept changes and arrange payment.
3. Disagreement: You can request a conference, mediation, or file an appeal.

Statute of Limitations:

Generally, audits must be completed within three years of filing, but this can extend to six years if unreported income exceeds a certain threshold or indefinitely in cases of fraud.

How to Succeed in a Tax Audit:

Preparation and strategic representation are key. Gather supporting documentation, hire an experienced representative, and develop a solid strategy. Winning an audit may mean no changes to your return or minimizing additional liability.